Embedding sustainability into how farming is funded. That, in a nutshell, is how IFOAM EU and organic farming researchers FiBL think CAP should function.
On 10th April 2018, the European contingent of the International Federation of Organic Agriculture Movements (IFOAM EU) published a joint report with the Research Institute for Organic Agriculture (FiBL), ‘Towards a new public goods payment model for remunerating farmers under the CAP Post-2020.’
At present, CAP doesn’t work on four levels, the report suggests:
Missing link between CAP objectives, spending and instruments
Ineffective Pillar 1 Greening component
Indifferent effectiveness of Pillar 2 agri-environment and climate measures
Low acceptance of the CAP by both farmers and citizens
So what to do? The clue is in the subtitle -“Potential of sustainability assessment tools for improving the effectiveness, efficiency, and acceptance of the CAP.”
IFOAM EU and FiBL claim that their new approach will be “a more effective and cost-efficient CAP” as it will integrate “sustainability assessment in the design, targeting and monitoring of policies and in payment allocation.” And this more targeted, clear, performance-orientated CAP will be accepted by “both farmers and citizens.”
Eduardo Cuoco, IFOAM EU Director:
“we need to modernise the Common Agriculture Policy to move away from compensating farmers to rewarding farmers for the public goods that they deliver to society…For this reform to be effective, the whole CAP structure should have a strong focus on sustainability.”
Five Key Paradigms to Bring Sustainability into CAP
The report suggests that the concept for integrating sustainability assessment in the CAP is built upon the following key paradigms:
1. Move the CAP towards sustainability including all three dimensions of
sustainability (economic, environmental, social)
2. Unlock farmers’ potential as “sustainable entrepreneurs” (through results-based or other similar approaches, which reward farmers for their achievement, allowing for flexibilities and innovations in the method to get there)
3. Base the CAP on clear (measurable) sustainability goals
4. Sustainability performance-oriented payments
5. Compliance with existing legislation is not (enough to justify being) rewarded by taxpayer’s money
How Sustainability Assessment Can Support Policy
Both designing and targeting agricultural policy
At the largest scale, the goals of European agricultural policy need to be tightly linked to the Sustainable Development Goals (SDGs). Within specific themes, like climate change mitigation, specific objectives and targets need to adhere to applicable frameworks such as the Effort Sharing Regulation. Crucially, this alignment of targets needs to occur at all scales, from the EU down to the regional. This is to provide coherence and confirm targeted spending.
Each CAP Strategic Plan, formulated by the Members States themselves, needs to relate closely to EU-level objectives. For example, “in terms of the objective on climate change mitigation, this means that Member States will have to set out the baseline for GHG emission reductions for their agricultural sector and formulate appropriate targets, taking into account the structure of their farming sectors, their international climate commitments as well as their EU obligations.’
Monitoring and controlling the sustainability performance
Currently there are multiple databases used for administering farm payments such as the Farm Structure Survey (FSS) and the Farm Accountancy Data Network (FADN). These analyse the economic performance of different farming practices and farm types in different parts of the continent. Management decisions need to make use of this existing data. Next, there need to be additional face-to-face farm visits, either regularly or risk-based occasional visits, to assess performance.
There are two key ways for measuring whether a farm achieves a specific goal:
- Multi-criteria assessment, e.g. the SMART-Farm Tool, defines key indicators affecting the sustainability objectives. The SMART-Farm Tool, for example, comprises 58 sustainability objectives, crucially also measures cross-overs between these objectives. The same indicator may affect a variety of objectives and this is taken into account.
- Quantitative modelling is employed if a single target variable and easily assess whether or not a goal has been achieved.
Allocating payments according to sustainability performance
National and regional social, environmental and economic priorities and contexts, need to determine the weighting of different sustainability performances, in terms of importance. The report proposes a farm payment scheme which is based on four elements
- Compliance with EU legislation
- Entry Level Scheme
- Advanced Voluntary Scheme
- Potential Complementary measures
Entry Level Scheme (ELS)
The Entry Level Scheme (ELS) is the most basic component of the proposed system. Financed by Pillar 1, it covers all CAP policy objectives. In order to receive farm payments, farmers have to comply with the sustainability requirements detailed here and the ELS could replace the current CAP Greening measures. Socio-economic measures will also be included. The ELS should be a mandatory component of each Member State Strategic Plan.
Advanced Voluntary Scheme (AVS)
The Advanced Voluntary Scheme (AVS) is also compulsory for Member States but voluntary for farmers. Financed by both Pillar 1 and 2, Member States define objectives and indicators for specific sustainability themes. Different to ELS, AVS covers a far broader base of objectives and potential strategies to address sustainability goals. Sustainability performance is measured by a scoring system with consideration for the national importance of each theme, as decided by Member States. Specific payment would thus be linked wholly to achievement of goals.
(Note that “Potential Complementary Measures” , the 4th element of this ‘allocating payments’ section, is also point 4)
Complementary Measures: Enabling farmers to develop individual farm sustainability strategies
The Complementary Measures refer to supporting the development of individual farms. They require visits and tailored advice in meeting sustainability goals and devising appropriate strategies. Involvement is voluntary for farmers, but does require Member States to assign a certain chunk of funds to such measures. Complementary measures could also include investment support, organic farming payments and even schemes rewarding collective actions over multiple farms or whole regions for biodiversity conservation, for example.
Something for everyone?
The report concludes that such a concept could improve both the efficiency and the effectiveness of the CAP. It stresses however that there might be quite some administrative work involved, likely with higher overall transaction costs to limit this burden. Worryingly,
“First, so far no sustainability assessment tool is ready for immediate
implementation. However, several tools are available which could serve as a good starting point. Second, limiting the administrative burden for both public administration and farmers would pose the biggest challenge.”
Its also worrying, presumably, that the report’s own expert assessment found “that no consensus can be reached among experts on most of the criteria.” (annex 4 pg 37)
The authors believe however that farmers may accept such an approach quite readily since they will have greater decision-making leeway in terms of how to meet sustainability targets. Additionally, with a tighter link between public money and public goods provision, the authors anticipate that citizens may favour such an approach. Finally, innovation, competitiveness and entrepreneurship may be actively encouraged by such a method.